China Investment Corp. Public-Equity Head Said to Quit

Zheng Kongdong, head of a China Investment Corp. department that specializes in publicly traded stocks, has left the nation’s $653 billion sovereign wealth fund, said three people with knowledge of the matter.

Zheng resigned from CIC last year to pursue other career opportunities, said one of the people who asked not to be identified as the information is private. Larry Zhang has been acting head of the department since Zheng’s departure was announced internally, the three people said.

CIC, based in Beijing, didn’t immediately respond to an e-mail seeking comment.

Both Zheng and Zhang are typical of the managers with international experience which CIC has recruited in recent years as it has reorganized its departments to emulate the structure of more established global peers. Zheng was a hedge fund manager in UBS Group AG’s global asset management unit in the U.S. before joining CIC in 2008. Zhang was a hedge-fund manager at London-based GSA Capital Partners and Barclays Global Investors.

“Looking at senior level hires over the years, it is clear that international experience is preferred and most have worked at well-known fund managers in the U.S. or Europe,” said Will Tan, a managing director at Singapore-based recruitment company Principle Partners Pte.

CIC Returns

CIC’s global investments yielded 9.3 percent in 2013, bringing cumulative annualized return from 2008 to 5.7 percent, according to its latest annual report, which doesn’t break down returns by assets. The MSCI World Index returned an annualized 4 percent in U.S. dollar terms in the same period.

The department is responsible for CIC’s direct investment in stocks and for allocations to external long-only funds focused on those assets. The share of public equities rose by

8.4 percentage points during 2013 to 40.4 percent of CIC’s overseas holdings as the end of that year, according to the latest information posted on its website.

CIC Chairman Ding Xuedong put the market value of its global investments at more than $200 billion in February 2014, Sina Corp. reported on its website then. Total assets, including domestic investments, were $653 billion at the end of 2013, CIC said.

Zheng was made head in 2009 of the CIC department, which then oversaw direct investments in public equities and allocations to funds of hedge funds. In another reorganization two years later, the unit shed the hedge funds responsibility and was put in charge of allocations to external long-only managers.

Other Departures

His departure followed that of Yu Bin, a managing director who worked under Zheng and helped run CIC’s direct investment in public equities. Yu quit in the first half of 2014 to plan his own Greater China equities fund. Another recent departure was Felix Chee, a former Manulife Financial Corp. investment executive who was made chief representative of CIC’s first international office in Toronto. He left CIC at the end of 2013.

Zhang, the acting department head, served as a senior adviser to China’s state pension fund manager, National Council for Social Security Fund, on global investments and once ran his own China-focused hedge fund JT Capital Management.

Almost 38 percent of 467 CIC employees outside a unit in charge of stakes in domestic financial firms had international work experience at the end of June, according to the annual report. Forty-one of them held overseas citizenship.

About 46 percent of its public equity holdings were in U.S. stocks and another 37 percent in other developed markets, according to the annual report.

CIC in June vowed to improve how it manages its overseas portfolio after state auditors found dereliction of duty by managers and inadequate due diligence in 12 investments made between 2008 and 2013, leading to losses.

— With assistance by Bei Hu

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE